Why Life Insurance Underwriting Feels Broken Right Now

Why Life Insurance Underwriting Feels Broken Right Now

Created by: David Beas, Life Marketing Consultant, Cavalier Associates
Featuring: Ken Turscak, Chief Underwriter

If you’ve ever had a case that felt clean—good client, decent health history, you did your field underwriting—and then it gets kicked out, rated, or declined out of nowhere… welcome to the current underwriting world.

I sat down with our Chief Underwriter, Ken Turscak, to talk through what’s actually happening behind the scenes right now. We covered the “AI/accelerated underwriting” fog, the long-term care explosion, why carrier capacity is quietly changing the game, and the underwriting niches that are moving fast (in a good way).

Here are the highlights, in plain English.

Accelerated underwriting is real… and it’s still a black box

A lot of these programs have been around for years. Some started pre-COVID. But the big thing Ken said is: we’re still in the middle of the evolution.

The hard part is when underwriting moves from “a human underwriter can explain this” to “the algorithm blended five data sources and spit out a result.”

That’s where you get the surprises:

• client looks healthy on the surface
• case gets kicked out or declined
• the explanation is vague
• even the carrier side sometimes can’t clearly point to one single thing

So you’re left trying to make sense of what doesn’t make sense.

How I think about it: life insurance underwriting is like the ‘94 Camry—reliable, predictable. But the industry is trying to bolt on Tesla-level automation, and sometimes the ride is smooth… and sometimes it’s a 30-car pileup.

The marketing numbers are… optimistic

You’ve seen the marketing sheets: “70% go straight through.”
Okay. Maybe. In the right “cell.” (Young, smaller face amounts, super clean health.)

But in the real world—especially over age 50—those numbers often don’t feel like 70%. And even the definition of “throughput” changes carrier to carrier. Some count anything that eventually got approved. Others count only true instant decisions.

My rule of thumb: whatever number you see on the carrier slick, cut it in half and start there.

When the system goes sideways, the human element still matters

This is the part people underestimate.

Automation reduces friction until it doesn’t. And when it doesn’t, you need someone who can pull the case out of the ditch.

Ken talked about one of the most common pain points: you get a decline or a kick-out and the carrier basically says, “due to information in the Milliman report” (or similar). That’s it. No details.

So now we have to:

• pull the report (when possible / appropriate)
• isolate what triggered the issue
• figure out if it’s legit, outdated, wrong, or misinterpreted
• and either salvage it with the same carrier or reroute it to a better fit

And yes—we’ve seen plenty of declines turn into standard or better once the real issue is identified and framed correctly.

LTC and living benefits are everywhere now… but they’re not all the same

Ten years ago, there were a couple staples. Today? Living benefits are basically standard equipment.

But here’s the trap: underwriting and claims don’t work the same across the board.

Ken made a point that needs to be said out loud:
You can get life insurance approved at standard or preferred… and still have the LTC rider declined.

Because you’re underwriting two different things:

• mortality (life)
• morbidity (care risk)

And morbidity cares about stuff advisors aren’t always focused on if they’ve lived mostly in life insurance.

Also: “chronic illness rider,” “LTC rider,” and “asset-based LTC” aren’t interchangeable. They might all feel like “living benefits,” but the details matter—how benefits trigger, how claims are paid, what qualifies, what doesn’t.

If you sell these: you need to understand not just the illustration, but the claims story.

One of the biggest changes nobody talks about: carrier capacity + reinsurance

This is the quiet shift that can make or break larger cases.

Ken’s point: in the last couple years, several carriers have increased retention limits and/or expanded capacity through reinsurance agreements.

Translation: there are more carriers today that can play in bigger face amounts than there were not that long ago.

This is an area that’s still evolving, and you’re going to keep seeing announcements.

COVID’s lingering effect is mostly showing up in older ages

Nobody wants to talk about COVID. But underwriting still feels it.

Where it shows up the most is older ages (especially 80+). Some carriers pulled back. Others stayed in, but scrutiny is higher than it used to be.

Ken also mentioned “long COVID” exists in the reinsurance manuals, but they’re seeing it relatively rarely in day-to-day casework.

The “buying business” era is mostly gone — now it’s strategy and negotiation

This was a big one.

Back in the day, carriers could make “business decisions” just because of producer relationships or volume. That’s basically dead.

What replaced it is more structured:

• a couple carriers may have quarterly budgets that can help buy down ratings in certain cases
• but it’s limited, and it’s not a magic wand

The real game today is:

• identify what created the rating
• challenge severity if it’s overstated
• tighten the story with better documentation
• and choose the right carrier/program

It’s not “buy it down from table 5 to standard.”
It’s “get it from table 5 to table 2 the right way… then see what levers exist.”

The encouraging part: more people are insurable than advisors think

This is the part I want advisors to actually hear.

Some niches are moving fast:

• HIV: now underwritten across the market; standard is real in the right scenario
• Diabetes (especially well controlled Type 2): standard outcomes are more common than they used to be
• Marijuana use: daily use is no longer an automatic decline everywhere
• Cancer history: more nuance; some early-stage histories can even be preferred in the right fact pattern
• Certain occupations: flat extras aren’t as automatic as they used to be

Ken also wanted to flag (and I agree) that conditions like Parkinson’s and MS are still treated like “non-starters” by a lot of advisors—but depending on severity, age, and profile, there may be real options.

And that’s the bigger point:
If you haven’t revisited a decline in a few years, you might be operating on outdated underwriting assumptions.

Closing

If you have clients you couldn’t place years ago—or clients you avoided bringing up insurance with because you assumed it was a dead end—it’s worth reopening the conversation.

Underwriting is getting more automated, more confusing, and more nuanced… all at the same time.

But the upside is: more people are insurable today than they were five or ten years ago—if you know where to take the case and how to frame it.

If you want help with a specific situation, reach out. Happy to look at it and see if we can get it on track.